Houston real estate developer Gerald D. Hines was the son of a steel worker from Gary, Indiana with a talent for “crunching numbers” and mixing metaphors. Now an extremely wealthy nonagenarian investor who lives in London with his Australian trophy wife, he popularized, in his circle, the term “cash flow” as a synonym for “money”. He seemed to understand, in his eccentrically brilliant way, what Berry Eichengreen so carefully argues in Golden Fetters, The Gold Standard and the Great Depression, 1919-1939, that grand assets (be those huge gold reserves or seventy-story buildings) are irrelevant if there is no liquidity; that economics is less about quantity than about movement and circulation. Eichengreen’s recurring dual theme is the importance of international cooperation regarding monetary policy and the credibility of the system. As such, he effectively shows that money is a construct, an international belief system, an article of faith, as it were, that only works if people trust it. The counterpoint to faith is fear; the suspicion that banks will fail or that foreign holdings will vaporize in some future hyperinflationary spiral.  He also points out American greed as one of  the chronically sticky cogs in the system. Just to name one example, because American lenders could not see their way to forgive allied war debts, France and Britain had to insist on full and timely German payment of reparations, provoking monetary collapse there and delaying the global recovery that was in the best interest of all, (128, see also, 216, 397). Eichengreen contends that the gold standard, once believed to be a safeguard that could guarantee the relative value of different currencies, had become little more than an antiquated, unwieldy fetish. Mismanaged, gold became a principle contributing factor to the biggest recession the world has ever known. 

The memory of hyperinflation is one of Eichengreen’s bedrock arguments (126). In The World of Yesterday, Stephen Zweig describes the experience of postwar hyperinflation in Germany and Austria as demoralizing and humiliating (Zweig, 340). More than just an economic policy issue to be resolved, the economic collapse added insult to injury, damaging central European culture in irrecoverable ways. The people felt betrayed. They couldn’t believe in anything, anymore. That collective loss of soul set the stage, not only for the Great Depression, but for World War II.

For lack of gold reserves, American loans propped up South American economies, sometimes called “developing”, though they didn’t seem to be developing anything but financial headaches for future generations. As Brazil and Argentina exported commodities and raw materials, they imported manufactured goods and covered their balance of payments with imported capital, which meant borrowed money. When loans dried up and commodity prices fell in 1929, Argentines and Brazilians went hungry so that central banks could pay the interest on past loans. That pattern is still very current. Cheryl Payer’s (1974) study, The Debt Trap: The IMF and the Third World, demonstrates how what Americans called “foreign aid” created an international debt slavery from which the countries of the developing world would never escape. In The Alliance that Lost its Way (1970), Jerome Levinson and Juan de Onis show how even the idealistic Alliance for Progress often provided nothing more than loans to service foreign debt, or credit to acquire more consumer goods. Development has always been out of reach, just a figment of the American imagination. 

Eichengreen’s most important contribution is perhaps the way in which he observes the gradual identification of financial stability with military security, (71, 86). Little wonder then, that, in the U.S., the Harriman’s, the Dulles’s and the Cabot Lodge’s became the diplomats, conspirators and secret agents of ensuing decades. It might seem that they were out of their element, but no, they were precisely entangled in it. He also points up the political war of attrition between major industrialists and common working people. Who would pay for the common good was not (and is not) a settled issue. The weakness of Eichengreen’s work is that he often assumes familiarity with the complex terminology and subtle suppositions of macroeconomics. Newcomers to the field, nonetheless, will be amazed at how the free market, often assumed to be the natural state of the evolving Darwinian universe, is contrived, manipulated, regulated and adjusted. The reader stumbles on “the rules of the game” so often that it might seem more like Monopoly than a global struggle for daily bread and well-being. Stepping back, the role of gold seems exotic. In Texas, we say, dumber than a box of rocks. The metal of magic and myth, the unreachable goal of alchemy, gold was just another rock, and it only worked as a regulating force because it was relatively scarce. Indigenous tribes traded in green feathers, face paint and sea shells. In fact, the Inca gold that attracted the attention of the Pizarro brothers had its origin, not in the altiplano, but in the steamy Amazon, where local tribes traded it off because, they said, you couldn’t eat it (255).